In telephony, especially in North America, an overlay plan is the practice of introducing a new area code by applying it onto a geographic area that is already occupied by one or more existing area codes, resulting in two (or more) area codes serving the same area.

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Prior to the introduction of overlay plans, the method of introducing new area codes (also known as numbering plan areas or NPAs) in a region was to divide the existing territory of one area code into two (or more) pieces, usually allowing the more established or developed section to retain the original area code, and changing the numbering space of the other section(s) to have a new area code. For example, the original area code for the entire state of Washington was 206; today 206 applies to only the city of Seattle and the immediate vicinity. This practice became known as a split plan.

In a number of cases, overlay plans were implemented on a special case basis to implement specialized dialing plans. In some areas, a party in one area code could dial a prefix which was local, but in a different area code, with only 7 digits. If they were calling a distant prefix in the same area code, they would either have to dial 1+ the number or 1+area code+ the number.

This practice was done on a large scale in Washington, DC and its suburbs in Maryland and Virginia. Until 1991, the entire region was a single local calling area, and it was possible for anyone living in the metro area to dial a number in the District, Maryland, or Virginia with only seven digits. This setup was possible because the entire Washington metropolitan area is a single local access and transport area (LATA). The way this was implemented was that every number in Maryland's 301 and northern Virginia's 703 was given a 'hidden' phone number consisting of the same number in the District's area code 202, essentially making area code 202 an overlay over the entire region. This meant a Virginia number such as 703-931-xxxx could also have been dialed as 202-931-xxxx, while a Maryland number such as 301-585-xxxx could also be dialed as 202-585-xxxx. However, this also meant no prefix could be duplicated in any of the three territories, even in areas a safe distance from the metro area such as southwestern Virginia or the Eastern Shore of Maryland. By 1991 the use of 202 as a de facto overlay was discontinued due to growing demand for numbers, and callers in the area dialing an out-of-area-code number had to dial the full 10 digit number.

A similar scheme was employed in Canada's capital, Ottawa. It shared the same calling area as Hull, its twin city in Quebec, even though Ottawa was in area code 613 and Hull was in area code 819. Until 2006, it was possible to place a call between Ottawa and Hull with only seven digits--a scheme that continued even after Hull was merged into the megacity of Gatineau in 2002. As in the Washington area, this was implemented in a way that the same number could be duplicated anywhere in eastern Ontario or western Quebec. However, Canada's inefficient number allocation system (see below) and the proliferation of cell phones brought 819 to the brink of exhaustion by the turn of the century. The only available numbers in 819 were numbers that could have theoretically been used in the former Hull, but could not be issued without breaking seven-digit dialing between Ottawa and Hull. The scheme was largely ended in 2006. The sole legacy of the old system is a "dual dialability" system for federal government numbers on both sides of the provincial border; all federal government offices on the Quebec side duplicated several exchanges worth of their counterparts on the Ontario side.

Urban sprawl accelerated the rate of expansion of metropolitan areas, and multiple split plans have caused the geographical area of a given area code in those regions to shrink. Also, the rapid growth in popularity of mobile phones, in addition to regular land line growth, has increased demand for new phone numbers even more.

The rise in popularity of mobile phones has added to the pressure against split plans, as an area code change affecting the exchange in which a cell phone is based not only forces customers to reprogram their phones, but requires the wireless carrier to reassign the number of every device based in those areas.

To alleviate complaints about such changes, in 1992 the telecommunication industry began to introduce "overlay plans" as a means to introduce new area codes. In this model, one fixed geographic area would concurrently have multiple valid area codes throughout. This plan's main benefit, which addressed many of the issues causing resistance to split plans, was that all existing phone numbers remained unaffected by the new area code. Newly assigned numbers in the overlay plan areas would have the new area code. As a result, two telephones in the same building could have different area codes. The first use of this solution was in the borough of Manhattan in New York City, where area code 917 was added to the original 212.

However, most overlay plans introduced a new and arbitrary inconvenience: mandatory 10-digit dialing (i.e., the area code must be included), even for local calls, in the affected area. This and the difficulty of remembering all the area codes in a geographic area made overlay plans only marginally less unpopular than split plans. Ten digit dialing is not a technically-necessary requirement (1-917 was initially deployed without it) but a U.S. Federal Communications Commission (FCC) mandate instituted it at the demand of telephone companies, to whom being in an overlay instead of the main area code represents a disadvantage.[1]

Overlays initially met with resistance, as they resulted in different area codes within the same geographic area. In many cases (such as 847 in northwestern Chicago and 212 in New York City) an overlay was an additional disruption to a community which had already been subject to one or multiple code splits, encountering pushback from state regulators or consumer groups. However, with time, overlay plans have been used much more widely in some areas than others. For example, the northern third of Ohio is covered by two large overlay complexes, as is northern Georgia. Connecticut, Illinois, Oregon, New Jersey, Massachusetts, Maryland, and Texas have also used overlays heavily, and are (or soon will be) completely or mostly overlaid. In California, on the other hand, only five of 27 areas have overlays, the first of which was implemented in July 2006. There has not been an area code split since 2007 with area code 575 splitting off 505 in New Mexico, and there are no splits currently proposed (but many overlays). Presently, all but a few major American cities are overlaid; among the few cities were seven-digit dialing is still possible are Milwaukee, Memphis, Phoenix, and Seattle.

Telecommunications companies have increasingly favoured overlays even in sparsely-populated rural areas where ten-digit local numbers make little sense, as split plans force cellular providers to reprogram millions of client handsets to reflect changes in existing mobile numbers. Customers also incur costs to publish new letterhead and reprogram stored address book data on individual devices.

Overlay plans also favour incumbent wireline carriers over new entrants, as the established firm will already have large allocations of numbers in the more desirable existing code while subscribers of new/growing competing carriers are relegated to unfamiliar, new codes.

The first example of an entire state previously only served by a single code being overlaid was in West Virginia, which had been served with area code 304 since the inception of the area code system. Initially, state officials voted to split off northern West Virginia as area code 681 while leaving southern West Virginia in 304. However, lobbying by the telecommunications industry led the state to reverse itself and turn 681 into an overlay.

Overlays became popular among Canadian telephone companies soon after the turn of the millennium. Area codes corresponding to four of the five largest Canadian markets (416 in Toronto, 514 in Montreal, 604 in Vancouver, and 403 in Calgary) had split in the 1990s (as already mentioned, Ottawa-Hull already fell on an area code boundary). The split plans ended there; a flood of overlays which began with 416/647 in 2001 has now broken seven-digit dialling in every Canadian area code except the country's three Arctic territories, one small corner of northwestern Ontario, New Brunswick, and Newfoundland. Recently, West Virginia's example has been followed with the implementation of provincewide overlays. This was done mainly to spare rural areas the expense and burden of changing their numbers.

Distributed overlay (or all-services overlay): an entire existing area gains another area code serving the entire area. Most overlays are of this kind.

Single concentrated overlay: only the high-growth portion of an existing area gains a second area code.

Multiple concentrated overlay: the entire existing area gains multiple additional area codes, each of which serves a different subsection of the original. There are no known examples of such being implemented in the NANPA.

Multiple-area distributed overlay: two or more area codes gain a single new area code covering such an area. Examples include 872 in Chicago, Illinois (over 312 and 773) and 587 in Alberta (over 403 and 780).

Boundary-extension overlay: a neighboring area code (either an overlay code or single primary area code) is expanded to serve the area as well. Examples include 321 over 407 in central Florida and 778 over 250 in British Columbia.

Service-specific overlay: the first overlay area code in the NANPA, 917, is the only example of this. It was originally established as an area code specifically for cell phones and pagers in New York City, but soon after, the FCC said area codes going forth could not be service-specific, but they allowed 917 to remain as such. However, 917 is being used for landlines in New York City on a limited basis.

The persistent unpopularity of new area code creation, whether by split or overlay plans, led to a change in the rules of number block allocation, in order to conserve the pool of available phone numbers. This change, which allowed for the assignment of smaller number blocks, is commonly known as number pooling. This has noticeably slowed the need for area code growth, but not completely. For example, the western half of Washington (including Seattle) narrowly avoided needing an overlay in 2001. Area code 564, originally planned for introduction in October 2001, was canceled in August 2001 after state regulators determined that the use of number pooling had allowed existing numbers in western Washington to be used more efficiently

There is no number pooling in Canada. Instead, every competing carrier is issued blocks of 10,000 numbers in each rate centre in which it offers new service and each local interconnection region in which it ports existing numbers. Individual rate centres exist even in the smallest villages; many amalgamated municipalities have multiple rate centres which were not combined for years, if at all. While most rate centres in Canada don't need very many numbers to adequately service customers, a number is no longer available for use elsewhere once assigned to a carrier and rate centre. This resulted in thousands of wasted numbers, and the proliferation of cell phones, fax machines, pagers and dial-up Internet connections (particularly in larger markets) only exacerbated this. This is partly why overlays became the preferred relief solution in Canada. As mentioned above, by 2013 seven-digit dialling had been broken in all eight of Canada's original area codes.